Ten "Future" Signs of an Oil Bubble

PUBLISHED IN "INDUSTRIAL ECONOMIST" - SEP 2008

Mainstream media is abound with the idea that "the Commodities/Oil Bubble has burst". But what has happened over the last few weeks is nothing more than a normal correction in an otherwise structural bull market for commodities in general and Crude Oil in particular. I have pointed out a few indicative "future" signs -- events when they happen in the future -- would indicate that the bull market is nearing it's end. But my guess is we are atleast 5-10 years away from such a scenario.

Energy Policy: Band Aids for Bullet Wounds

Published in Business Line on Apr 12, 2008

Shows that our current Energy Policy is terribly flawed. Also it should be obvious to anybody tracking the issue that awareness of fundamental Energy concepts is completely lacking amongst our bureacrats. & these people go on to define how we can achieve "Energy Security".

If these trends continue, we are headed for a disaster on the Energy front. I hope sooner rather than later, the Government allows the Free markets to operate in this sector. The best service that the Planning Commission can do to India is to NOT create another "Integrated Energy Policy" document.

CHEAP at $100/barrel

Published in Business Line on Jan 04, 2008

With Oil hitting the $100 mark on Jan 02 as well as Jan 03, this is a good time to summarize what we have been writing in this column and explain why this $100 is just one small step in what is going to be long ride upwards. For the decade of 2010-2020, we expect Oil prices to average well above the $200/barrel mark (i.e. in 2007 dollar terms... in terms of "Ben" dollars, who knows where this is going to be) and we have explained the rationale in this article.

Peak Oil: Facts Converge with Theory

Published in Business Line on Sep 14, 2007

Summarizing the four different methodologies that could be used to predict the timing of Peak Oil and concluding that 2006 is most likely to be the year of Peak Oil. This also implies that prices are set to increase dramatically in the years ahead from the current historically high levels of $80/barrel.

The Harsh Realities of Peak Oil

Published in LiveMint on Aug 02, 2007

An introduction to Peak Oil and a summary of the publications so far. The picture is not included in the online version of the paper and so have added the same here. Readers need to remember that my predictions of $200 by 2010 was made in 2005 when Crude prices were $50.

Reserve Additions, Over a Barrel

Published in Business Line on July 21, 2007

It is well accepted that 1985 was the last year in which we discovered more barrels than what we consumed. For each of the subsequent 20 years this trend of discovery being lower than consumption has continued. That should imply that our Net remianing reserves should be going down over the period since we are consumming from previously discovered reserves.

However, the BP Annual Statistical Review shows the opposite trend in which Reserves have been going up over the last two decade period. That is explained by the analysts through a phenomenon known as "Reserve Additions" i.e. our ability to extract more from existing oilfields than what was originally estimated. These analysts further extrapolate and state that this trend of Reserve Additions would continue into the future as well and so the fact that we are discovering less and less new oilfields every year is not a major cause of concern.

This paper explains why such thinking is misplaced and that this "Reserve Additions" is mainly the result of a one-time historical event... and that the pendulum of this event has swung the other way today which would cause Reserve Subtractions in the future.

Has Saudi Oil Production Peaked

Published in BL on May 26, 2007

Explains why Saudi Arabia has probably peaked and would never be able to expand production beyond the current 9-10 mbpd on a sustainable basis.

Also given the current gasoline inventories and predictions for a very active hurricane season, we could well witness $90-$100/barrel this summer.